Dutch economic consensus model frays as challenges grow

Tomorrow’s elections will likely produce a coalition government that faces multiple challenges, including an aging population, to maintain the nation’s competitiveness

By Alan Wheatley / Reuters, AMSTERDAM

Illustration: Yusha

No matter who comes out on top in tomorrow’s election, the Netherlands will find it hard to revive the practice of economic policymaking by consensus that has been one of the secrets of the country’s prosperity.

From fast-rising healthcare costs to the need for greater labor flexibility as the population ages, the Netherlands faces a host of challenges beyond Europe’s current cyclical slowdown if it is to maintain its competitiveness.

Yet even as hot-button issues such as increasing the retirement age and relaxing dismissal laws cry out for cooperation, the Dutch may be in danger of losing the ingrained habit of extensive policy consultation and compromise among government, employers and trade unions.

Parties on the left and the right of the political spectrum have emerged to challenge the traditional order, although the latest polls indicate two mainstream parties — Liberals and Labor — could win enough seats to form a coalition with another party from the middle ground.

“We need each other more than ever, and what’s happening? We’re just growing apart,” said Jaap Paauwe, a professor of human resource studies at Tilburg University.

Putting aside differences for the greater good is not an optional extra in the Netherlands. More than a quarter of the country lies below sea level, so communities simply must work together to build and maintain the dikes that protect their reclaimed land, or “polder.”

The story of the little Dutch boy who stuck his finger in a leaking dike to prevent a catastrophic flood resonates in a country where more than half the 17 million population lives in areas prone to floods.

The polder model of managing economic and social policy has been under strain for about a decade in tandem with a reordering of the Dutch political system as radicals on both the right and the left have outflanked the established mainstream parties.

A well-organized activist minority allied to the left-wing Socialist Party has burrowed its way into the biggest trade union confederation, the Labor Party-affiliated FNV, preventing it from agreeing on negotiating positions. The FNV’s president resigned in June.

With the unions hamstrung and sidelined, employers have built on what critics see as already undue influence with Dutch Prime Minister Mark Rutte’s fiscally conservative Liberal Party.

“This is crippling the whole polder model at the moment, and that’s a terrible thing,” said Jaap Smit, head of the smaller Christian democratic CNV union confederation.

In an interview in his office in Utrecht, the former church minister and business consultant said the Netherlands needed a strong union movement to help bring in labor reforms and adjust to a rapidly changing global economy.

“The West has dominated the world for many decades, but with other economies now rising, Europe needs to shape up,” Smit said. “What’s difficult for me is that I have to tell my members that we need more flexibility and mobility. Old answers won’t work for new questions.”